LAM SIU KUEN v. FU YIP GARMENT FACTORY LTD.

HCMP 3368/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3368 OF 2002

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D E C I S I O N

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1. This is an application taken out by the plaintiff Madam Lam Siu Kuen pursuant to section 114B(1) of the Companies Ordinance, Cap. 32.

2. The plaintiff is now the sole director and shareholder of Fu Yip Garment Factory Limited ("the Company"). She seeks an order under that provision that she may be at liberty to convene a meeting of the Company for the purpose of appointing an additional director. It is proposed that the nephew of the late husband of the plaintiff is to be appointed as an additional director once a resolution has been passed at the extraordinary general meeting of the Company to be convened.

3. The application arose in this manner. The plaintiff and her late husband, Mr Chang Kwok Keung, used to be the only two shareholders and directors of the Company, each holding 50% of the shares. Mr Chang passed away on 12 July 2002. The plaintiff is the sole executrix and beneficiary of Mr Chang's estate as provided in his will.

4. The Company has been carrying on a garment business and has charged its property to a bank for general banking facilities. The plaintiff and Mr Chang are also the directors and shareholders of another company known as Best Allied Industrial Limited in which they held 40% of the shares.

5. The plaintiff was informed by the bank that the bank would not be prepared to continue providing facilities to the Company and Best Allied Industrial Limited unless and until an additional director of the Company is appointed, as the bank is concerned about the legality of any decision made by the Company since the death of Mr Chang.

6. It is provided in Article 22 of the Articles of Association of the Company that the quorum for all general meetings shall be two members, holding not less than 51 % of the paid-up capital personally present or by proxy, and that no business shall be transacted at any meeting unless the quorum is present. Article 8 also provides that the quorum of a director's meeting shall be two directors personally present or represented by their substitutes.

7. It is plain that in this situation, it is not legally possible for the Company to hold a general meeting without a direction from the Court under section 114B(1) that one member of the Company present in person or by proxy shall be deemed to constitute a meeting.

8. There is no possible dispute as to the proposed appointment of the nephew of the plaintiff's husband as an additional director. In the circumstances, it would be appropriate to make an order as sought in the originating summons. I order that the plaintiff be at liberty to convene a meeting of the Company for the purpose of appointing an additional director, that 14 days' notice of the said meeting be dispensed with and that one member of the Company personally present do constitute a quorum at such meeting. I also give liberty to apply and that there is to be no order as to costs for this application.